City Power Johannesburg (SOC) Ltd Business Plan 2017 - 2018 Final
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City Power Johannesburg (SOC) Ltd
Business Plan
2017 – 2018
Final
City Power Draft Business Plan 2017-21
Official sign-off
It is hereby certified that this Strategic Plan:
• Was developed by the management of City Power SOC Ltd under the guidance of the
Managing Director.
• Takes into account all the relevant policies, legislation and other mandates for which
the City Power SOC Ltd is responsible.
• Accurately reflects the strategic outcome oriented goals and objectives which City
Power SOC Ltd will endeavor to achieve over the period 2017-2018.
Sign Off:
MD Name: ……………………… Signature: …………………… Date: ………………
Sector ED Name: ………..…………. Signature: …………………… Date: ……….………
Sector MMC Name: ………………… Signature: …………………… Date: ……………….
Company Details
Company Name: City Power Johannesburg (SOC) Ltd
Company Registration Number: Reg 2000/030051/30
Physical Address: 40 Heronmere Road, Reuven
Postal Address: PO Box 38766, Booysens, 2016
Phone Number: (+27) 011 490 7000
Fax Number: (+27) 011 490 7590
E-mail: electricity@citypower.co.za
Website: www.citypower.co.za
Customer Contact Centre: (+27) 011 375 5555
Final 2
City Power Draft Business Plan 2017-21 Contents 1. EXECUTIVE SUMMARY............................................................................................................................. 6 1.1. CITY POWER STRATEGIC DIRECTION .................................................................................................... 6 1.2. PROBLEM STATEMENT ........................................................................................................................ 6 1.3. CORE MANDATE/PURPOSE/OBJECTIVE ............................................................................................... 7 2. INTRODUCTION ....................................................................................................................................... 8 2.1. BACKGROUND ..................................................................................................................................... 8 2.2. OVERVIEW .......................................................................................................................................... 9 3. STRATEGIC ENVIRONMENTAL ANALYSES ............................................................................................... 11 3.1. BACKGROUND ................................................................................................................................... 11 3.2. HIGH LEVEL SWOT ANALYSIS ............................................................................................................. 11 3.3. HIGH LEVEL PESTLE ANALYSIS ............................................................................................................ 12 3.4. INDUSTRY CHANGE DRIVERS ............................................................................................................. 13 3.5. THE TOP 10 CHANGE OPPORTUNITIES: .............................................................................................. 14 4. SHAREHOLDER ALIGNMENT TO GDS AND IDP ....................................................................................... 15 4.1. BACKGROUND ................................................................................................................................... 15 4.2. THE STRATEGIC THRUST FOR 2017/18 IDP REVIEW OF THE SHAREHOLDER ....................................... 15 4.2.1. COJ VISION .................................................................................................................................... 15 4.2.2. COJ MISSION ................................................................................................................................. 15 4.2.3. COJ OUTCOMES AND PRIORITIES .................................................................................................. 15 4.2.4. CITY POWER ALIGNMENT .............................................................................................................. 16 5. BUSINESS PERFORMANCE OBJECTIVES ................................................................................... 17 5.1. FINANCIAL PERFORMANCE ....................................................................................................... 18 5.2. STAKEHOLDER/CUSTOMER PERFORMANCE ....................................................................... 19 5.3. INTERNAL PROCESSES .............................................................................................................. 20 5.4. HIGH PERFORMANCE TEAMS ............................................................................................................ 22 6. DAY TO DAY OPERATIONS ..................................................................................................................... 24 6.1. COMMUNICATION AND STAKEHOLDER MANAGEMENT .................................................................... 24 6.1.1. INTEGRATED COMMUNICATIONS STRATEGIC APPROACH ............................................................. 24 6.1.2. STAKEHOLDER MANAGEMENT APPROACH ................................................................................... 27 6.2. REVENUE MANAGEMENT .................................................................................................................. 29 6.2.1. TECHNICAL LOSSES ........................................................................................................................ 29 6.2.2. NON-TECHNICAL LOSSES ............................................................................................................... 29 6.2.3. IN LIGHT OF BUDGET LEKGOTLA: IMPLEMENTATION PLAN ........................................................... 31 6.3. SERVICE DELIVERY MAINTENANCE PLAN ........................................................................................... 32 Final 3
City Power Draft Business Plan 2017-21 6.3.1. BACKGROUND ............................................................................................................................... 32 6.3.2. CRITICAL CHALLENGES .................................................................................................................. 32 6.3.3. RESPONSE TO THE SERVICE DELIVERY CRITICAL CHALLENGES ....................................................... 34 6.3.4. FUNDING REQUIREMENTS AND ALLOCATION ............................................................................... 34 6.3.5. SERVICE DELIVERY KEY PERFORMANCE INDICATORS .................................................................... 35 6.4. SECURITY OF SUPPLY ......................................................................................................................... 36 6.4.1. LOAD SHEDDING ........................................................................................................................... 36 6.4.2. ENERGY MANAGEMENT (INCLUDING DSM AND SSM)................................................................... 36 6.4.3. ASSET MANAGEMENT ................................................................................................................... 37 6.4.4. ELECTRIFICATION OF INFORMAL SETTLEMENTS ............................................................................ 37 6.5. ANTI-FRAUD AND CORRUPTION PLAN – 2017/2018 .......................................................................... 40 6.5.1. OBJECTIVES ................................................................................................................................... 40 6.5.2. APPROACH .................................................................................................................................... 40 6.5.3. TARGET AUDIENCE ........................................................................................................................ 41 6.5.4. DEFINING SUCCESS ........................................................................................................................ 41 6.5.5. POTENTIAL RISKS .......................................................................................................................... 41 6.5.6. ANTI-FRAUD AND CORRUPTION CAMPAIGNS ROLL OUT............................................................... 41 7. COMMUNITY BASED PROGRAMME ....................................................................................................... 44 7.1. REGION A .......................................................................................................................................... 44 7.2. REGION B .......................................................................................................................................... 45 7.3. REGION C .......................................................................................................................................... 46 7.4. REGION D .......................................................................................................................................... 46 7.5. REGION E........................................................................................................................................... 47 7.6. REGION F ........................................................................................................................................... 48 7.7. REGION G .......................................................................................................................................... 50 8. FINANCIAL PLAN AND IMPACT .............................................................................................................. 51 8.1. TARIFF PLAN ...................................................................................................................................... 51 8.1.1. BACKGROUND ............................................................................................................................... 51 8.1.2. BULK PURCHASES .......................................................................................................................... 52 8.1.3. DESIGN PRINCIPLES FOR 2017/18 AND BEYOND ........................................................................... 58 8.1.4. KEY ASSUMPTIONS AND PROPOSED INCREASE ............................................................................. 58 8.2. OPERATIONAL BUDGET ..................................................................................................................... 61 8.2.1. INCOME STATEMENT AND EXPLANATION OF VARIANCES ............................................................. 61 8.2.2. RATIOS .......................................................................................................................................... 65 8.3. CAPITAL PLAN ................................................................................................................................... 66 Final 4
City Power Draft Business Plan 2017-21 8.3.1. LONG TERM CAPITAL BUDGET INDICATIVES .................................................................................. 66 8.3.2. CAPEX REQUIREMENTS ................................................................................................................. 66 8.3.3. CAPEX FUND ALLOCATION AND IMPACT ....................................................................................... 68 9. MANAGEMENT AND ORGANISATIONAL STRUCTURES ........................................................................... 74 9.1. ORGANISATION STRUCTURE ............................................................................................................. 74 9.2. MANAGEMENT TEAM ....................................................................................................................... 74 9.2.1. BOARD OF DIRECTORS .................................................................................................................. 75 9.2.2. EXECUTIVE COMMITTEE MEMBER ................................................................................................ 75 9.2.3. BOARD COMMITTEES .................................................................................................................... 76 9.2.4. COMPANY SECRETARIAL FUNCTION .............................................................................................. 78 9.3. HUMAN RESOURCES (HR) PLAN ........................................................................................................ 79 9.3.1. WHY IS HR CRITICAL TO BUSINESS PERFORMANCE AT CITY POWER? ............................................ 79 9.3.2. HR STRATEGIC FRAMEWORK......................................................................................................... 79 9.3.3. PRIORITIZING PEOPLE TO ENABLE STRATEGY EXECUTION ............................................................. 82 10. RISK MANAGEMENT .......................................................................................................................... 92 10.1. RISK MANAGEMENT PROCESS ........................................................................................................... 92 10.2. RISK IDENTIFICATION ........................................................................................................................ 93 10.3. MONITORING AND REPORTING......................................................................................................... 94 10.4. AUDITING .......................................................................................................................................... 94 10.5. COMPLIANCE RISK MANAGEMENT .................................................................................................... 94 10.6. TOP STRATEGIC RISKS........................................................................................................................ 94 11. REPORT CONCLUSION ....................................................................................................................... 97 12. BUSINESS ACRONYMS AND APPENDICES .......................................................................................... 98 Final 5
City Power Draft Business Plan 2017-21
1. Executive Summary
1.1. City Power Strategic Direction
1.2. Problem Statement
The aim of City Power is to assist the City of Johannesburg to address the South African challenge
of security and quality of electricity supply i.e. enabling consumers who reside in the City of
Johannesburg jurisdiction to obtain electricity at a defined quality and reliability at affordable rates
and transparent prices.
In parallel to this objective City Power will also be required to ensure the sustainability of the
business through the achievement of certain agreed to financial, social and environmental goals.
Human capital is a dynamic, shifting asset because the organisation, its managers and individuals
make choices daily that help create or potentially destroy value. The sum of knowledge, skills,
experience and other relevant work attributes that reside in our workforce drives productivity,
performance, culture and achievement of other goals.
Final 6
City Power Draft Business Plan 2017-21 1.3. Core Mandate/Purpose/Objective Final 7
City Power Draft Business Plan 2017-21
2. Introduction
2.1. Background
Following the first democratic elections that took place in 1994, and the local government election
that followed in 1995, eleven local authorities were amalgamated to form the Greater
Johannesburg Metropolitan Council. By mid-1997 it became apparent that the new structures
were not optimally effective and the Councils of Greater Johannesburg were facing a severe
financial crisis. It was then agreed that a unified, metropolitan-wide initiative was necessary to
focus specifically on the critical problems facing the City. This led to the inception of the i-Goli
2002 plan. i-Goli 2002 was essentially a three-year strategic plan. It involved the structural
transformation of Metro functions with the view to ensuring enhanced and more cost effective
service delivery. It achieved this by reducing fragmentation, eliminating duplication, improving
accountability, focusing on human resource development and improving performance incentives.
From an organisational perspective, the i-Goli 2002 Plan put in place “sensible” structures that
delivered at greater levels of efficiency.
The i-Goli 2002 Plan envisaged that the City would work through a combination of new political
governance structures, agencies and corporatised entities. A key element of the i-Goli 2002
strategy for service delivery was the establishment of utilities, agencies and corporatised entities
now called the municipal owned entities (MOEs). One of the entities established was City Power
Johannesburg (SOC) Ltd, 100% owned by the City of Johannesburg, and established in terms of
the Companies Act, on 30 November 2000.
The National Energy Regulator of South Africa (NERSA) granted City Power a license to trade on
19 December 2001. City Power is not
the sole provider of electricity services
for the City.
City Power is accountable for public
lights in all of Johannesburg but the rest
of the electricity services are split with
Eskom. This Map of Johannesburg
show
in yellow areas that are provided
electricity by Eskom and
in blue the areas that are
provided electricity by City
Power.
Final 8
City Power Draft Business Plan 2017-21
In line with the establishment of City Power Johannesburg (SOC) Ltd, the Council utilises an
Environment and Infrastructure Services Department (EISD) to oversee the performance and
Group Governance to oversee the governance of the company, as well as to regulate it. In this
regard various agreements in principle were concluded during the establishment of the
companies. These included the Sale of Business Agreement (SBA) and the Service Delivery
Agreement (SDA).
The relationship maintained with the Greater Johannesburg Metropolitan Council is one of Service
Authority and Service Provider. City Power Johannesburg (SOC) Ltd is the preferred Service
Provider for the Service Authority, the Council. City Power Johannesburg (SOC) Ltd is the Energy
Distribution Service Provider to the Service Authority, Johannesburg Council. The core
competency of the business is to purchase, distribute and sell electricity within its geographical
footprint of business. The City of Johannesburg is the sole Shareowner. The Council, by means
of a Service Delivery Agreement, regulates the service in respect of the following: financial issues
(such as tariffs and capital expenditure), human resource issues (such as skills development),
delivery targets (maintenance of assets and addressing assets), and standards of customer care.
2.2. Overview
City Power strategy has evolved over the year in alignment with its sole shareholder, the City of
Johannesburg. The table below shows the journey of the company since its inception:
2002-2006 2006-2011 2011- 2016
Egoli 2002 GDS 2030 GDS 2040
Bringing the different Improving network Improving condition monitoring
municipalities together performance maintenance
Moving from fire -fighting to Perfecting time based Making sure we get paid for our
planned maintenance maintenance services & improve revenue
management
Developing and initiating Introducing condition Introduction of a zero tolerance to
Capex program to reduce monitoring maintenance fraud and corruption programme
backlog
Introduction of customer Implementation and improving Improve stakeholder communication,
segmentation Capex program to reduce engagement and management
backlog including R&CRM
Introduction of prepaid Consolidation and Review Company business model to
meters centralisation of customers move to an energy company
services
Improving prepaid & smart Shift to low carbon infrastructure and
meter technologies introduction of SSM & DSM
Piloting of DSM projects Introduction on TOU and green tariffs
Final 9
City Power Draft Business Plan 2017-21
The table below provides some high level statistics about City Power as at June 2016:
•Over 390,000
Customers •Large Power Users (LPU) are 1%, Prepaid are 62%
and Conventional Business/Domestic are 37%
•Over R14billion
Revenue •64% is from business and 36% from domestic
&prepaid
•Over R11,8billion invested in infrastrucutre in the past
Capital Investment 10years
•Over 17 500km of cable, over 18 000 substations, and
Infrastructure
over 270 000 public lights,
Asset Value •Estimated asset value of R52billion
Employees •Over 1700 employees
•Over 2800MW peak demand which is 8-10% of South
Peak Demand
African National Load
•Only utility in Africa with four ISO accreditations (9001,
ISO 14001, 18001 & 31000) and ISO 26000 compliant and
currently implementing 16000
National Key Point •Head office is National Key Point
Final 10City Power Draft Business Plan 2017-21
3. Strategic Environmental Analyses
3.1. Background
The City of Johannesburg has embarked upon journey to become a sustainable and smart City
of the future in line with the principals of the Growth and Development Strategy 2040 and in line
with the Vision, Mission, Pillars and priorities of the shareholder. Energy will be a critical
component in realising these aspirations. Whilst energy is key to unlocking the economic and
socio-economic development objectives, unchecked consumption of coal-based power will
increase carbon and energy intensity, threaten economic and environmental sustainability and
the quality of living within the City.
An environmental scan is a process which results in the identification and monitoring of factors
from both inside and outside the organization that may impact the long-term viability of the
organisation. For City Power, the Environmental Scan provides the Board and Management Team
with information that assists them in decision making.
This section of the business plan will provide a high level SWOT and PESTEL analysis, to identify
City Power’s Strengths, Weaknesses, Opportunities and Threats; and analyse the Political,
Economic, Social, Technological, Environmental and Legal environment in which it operates.
These are then addressed in the strategy that is contained in the rest of this document.
3.2. High Level SWOT Analysis
The following Strengths, Weaknesses, Opportunities and Threats have been identified by City
Power:
STRENGTHS WEAKNESSES
ISO accreditation (4 accreditations) Communication (Internal and External)
Unqualified Audit Revenue protection
Good knowledge and Contracts management
understanding of the current Perceived low employee morale,
business Ineffective performance management and High vacancy rates
Documented value chains Inability to execute projects and follow through on benefit realisation
Supportive stakeholder and Board Reducing the average age of our transmission and distribution network
Strategic Risks identified, where it is in excess of 40 years through refurbishment and
documented and monitored replacement
Updated risk management process Addressing and improving safety on the network i.e. replacement of
in place high risk equipment
Pockets of strong subject matter A network that, due to densification, has in many areas exceeded its
expertise firm capacity and in some instances reached its installed capacity
Outages and slow restoration times to restore power following outages
OPPORTUNITIES THREATS
Expansion and Security of supply Security of supply
Alternative energy sources, Off grid Theft/vandalism, illegal connections leading to loss of revenue and
solutions and disruptive forces damage to infrastructure
Community involvement/ High debt levels in South Africa leading to inability to pay or reduced
engagement consumption
Smart Grid realisation Dramatic increase in the cost of key resources i.e. labour and materials
Company image/reputation Comply with the Cluster programs while trying to refurbish and extend
Public-private partnerships our network
Investment in energy management Service delivery protests
systems High levels of coal usage leading to increased GHG despite pressures
Recovery of non-technical losses to reduce
People setting up their own off grid solutions and becoming
independent of the power grid
Final 11City Power Draft Business Plan 2017-21
3.3. High Level PESTLE Analysis
City Power continuously monitors the operation environment to assess impact on the programmes
and projects
EXTERNAL FACTORS EFFECT
Political Change in Political leadership High Level strategic focus/alignment
GDS 2040. Changing priorities/funding
COJ IDP Changing targets: knock on effect
SOCA/SONA Promises made: refocus mandate
Refocus of mandate; implications for service delivery and
business model
Economic Funding challenges Limited funding
Consumer spending pressures Reduced revenue if people cannot pay
Increased cost of supply Kelvin Reduced margins; or pass on costs which make
pricing/PPA electricity expensive
Security of supply Locked into agreement – negative impact on pricing
Investor and economic impact
Social Service delivery Pressures to deliver
Social media Interconnectedness: challenge of maintaining a positive
Company image/reputation company image and responding immediately to issues
Theft and vandalism, Illegal Increased outages and service delivery pressures
connections Inability to pay; increased crime (theft and vandalism)
Unemployment levels Increased demand on current network (old) or challenges
Social and economic inequality to replace new network, workforce health
Spatial challenges
Technological Disruptive and New technologies New skills required
Changing ICT landscape- cyber Cyber security becomes a greater challenge
security CP must act quickly to be a ‘world class’ utility
Globalisation/interconnectedness
Legal Constitutional requirements Mandate to supply electricity
Legislation and regulation requirements Limitation on procuring from IPP’s
(e.g, ISMO, Energy legislation and ISO) Accreditation requirements to maintain license
Legislation and regulatory limiting (wrt Legislation hinders carbon reduction and use of new
energy and low carbon) energy
Environmental Drive to reduce consumption and Less consumption, less revenue
emissions Pricing of renewables may be +ve or –ve
IPPs/renewable energy Security of supply through alternative means
Security of supply, Reliance on coal Coal usage = more emissions
and other fossil fuels for energy supply Limited resources = challenge to the business operating
for the foreseeable future model
Climate change and Natural resource
scarcity
Final 12City Power Draft Business Plan 2017-21 3.4. Industry Change Drivers City Power as part of the Energy Industry is affected and impacted by changes in the industry as highlighted below: Utilities need to innovate across the value chain to derive competitive advantage and turn disruptive threats into opportunities Final 13
City Power Draft Business Plan 2017-21
3.5. The Top 10 Change Opportunities:
The above changes present the following opportunities to entities and companies in the
industry:
1. Rising emerging markets’ energy demands (including poverty reduction and access to power)
2. Acquisitions or alliances to gain new capabilities (including growing skills base)
3. Growth in energy and ancillary services markets (including sustainable jobs)
4. Enhancing relationships with external regulatory and compliance bodies
5. Improving public perceptions (including customer control)
6. Increased focus on investor relations programs and communications (including security of
supply to drive investor appetite)
7. Integration of distributed energy resources (including necessity to innovate)
8. Increased investment in generation capacity and delivery infrastructure in emerging markets
(including security of supply and network investment)
9. Rising energy innovation in emerging markets
10. Improving onshore and offshore wind supply chain efficiency
Final 14City Power Draft Business Plan 2017-21
4. Shareholder Alignment to GDS and IDP
4.1. Background
It is vital for any company to align their Business Plan to the vision of its shareholder. In the
case of City Power this is done within the legislative and regulatory framework of municipalities
entities.
The business plan is developed and executed by the Board and Management in cooperation
with COJ to ensure alignment, sustainability and meeting the needs of all current and future
prosumers, consumers and customers of the energy.
4.2. The Strategic Thrust for 2017/18 IDP Review of the Shareholder
4.2.1. COJ Vision
The vision of the City of Johannesburg is “A Johannesburg that works, is a South Africa that
works”
4.2.2. COJ Mission
The mission of Johannesburg is “To create an enabling economic environment by making
Joburg more responsive in the delivery of quality service.”
4.2.3. COJ Outcomes and Priorities
The above will be attained utilising the following pillars and priorities:
Outcomes Priorities
Outcome 1: A growing, diverse and Priority 1: Promote economic development and attract investment towards
competitive economy that creates achieving 5% economic growth that reduces unemployment by 2021
jobs
Priority 2: Ensure pro‐poor development that addresses inequality and
Outcome 2: Enhanced, quality poverty and provides meaningful redress.
services and sustainable
environmental practices Priority 3: Create a culture of enhanced service delivery with pride.
Outcome 3: An inclusive society Priority 4: Create a sense of security through improved public safety.
with enhances quality of life that
provides meaningful redress Priority 5: Create an honest and transparent City that fights corruption.
through pro-poor development.
Priority 6: Create a City that responds to the needs of citizens, customers,
Outcome 4: Caring, safe and stakeholder and businesses.
secure communities
Priority 7: Enhance our financial sustainability.
Outcome 5: An honest, transparent
and responsive local government Priority 8: Encourage innovation and efficiency through the Smart City
that prides itself on service programme.
excellence
Priority 9: Preserve our resources for future generations.
Final 15City Power Draft Business Plan 2017-21
4.2.4. City Power Alignment
Proposed 2016/2021 Priorities CP Response
Promote economic development and attract Reliable network
investment that creates jobs towards achieving Network expansion to support new development
5% economic growth
Ensure pro-poor development that addresses Job creation programmes (permanent & temporary)
inequality and provides meaningful redress SMME and BBBEE support programme
Skills development programme
Electrification of informal settlement programme
Create a culture of enhanced service delivery with Skills development programme
pride Inculcate a culture of performance
Stakeholder engagement (internal & external)
Create an honest and transparent City that fights Fraud and corruption reduction strategy and plan,
corruption Embed an ethical culture in the organisation,
Assurance provided by AG and SABS
Create a City that responds to the needs of Infrastructure provision, refurbishment, upgrade and
residents maintenance
Review operating model
Job creation programmes
Electrification of informal settlement programme
Enhance our financial sustainability Effective revenue management,
Streamlining business processes
Use technology that encourages innovation and Roll out of Smart grid
efficiency
Preserve our resources for future generations Greenhouse gas reduction and improving energy mix
In light of the budget Lekgotla feedback City Power would be prioritising two value propositions:
Reducing losses
Improving quality of supply and service
Final 16City Power Draft Business Plan 2017-21 5. Business Performance Objectives City Power uses the Balanced Score Card Methodology to measure performance as outlined below: Priority Areas in light of Budget Lekgotla Final 17
5.1. Financial Performance
Joburg Priority: Enhance our financial sustainability
Value Weight Key Baseline Target Target 2017/18 Quarterly Targets Target Target 2017/18 Means of
Propositio Performa 2017-21 2017/18 2018/19 2019/20 Budget per verification
n nce programme
indicator Q1 Q2 Q3 Q4 Capex Opex
Sustainable 20% % of 31% 34% 31% Annual Annual Annual Annual 32% Gross 33% Gross SAP &
Value Gross gross gross gross target target target target Margin margin Spreadsheet
Creation margin margin margin margin
30% % of 100% 95% 95% 95% 95% 95% 95% 95% 95% R94,59 SAP
Controlla Controllab Controllab Controlla Controllabl Controlla Controlla Controlla Controllabl Controllabl 6m
ble Capex le Capex le Capex ble Capex e Capex ble ble ble e Capex e Capex R12611
spend spend spend spend spend Capex Capex Capex spend spend ,10 m
spend spend spend
50% % of Total 23,23% 15% total 17% total Annual Annual Annual Annual 16% total 15% total R134.2 Excel sheet from
losses Total losses losses target target target target losses losses m Revenue
losses Management and
COJ
There are three Key Performance Indicators for this perspective which are % of Gross margin, % of Controllable Capex spend and %
of Total losses.
Percentage gross margin is sales minus bulk purchases divided sales multiplied by 100.
Percentage of Controllable Capital spend where Controllable Capital Spend is Capex projects that the organisation has
control over (excludes projects funded by public contributions and insurance claims). This KPI is aligned to the risk that deals
with Inadequate capital funding
Total Losses are Billed units (KWh) as a percentage of purchased units (KWh). This KPI is aligned to the risk that deals with
Reduction of non-technical lossesCity Power Draft Business Plan 2017-21
5.2. Stakeholder/Customer Performance
Joburg Priority: Create a City that responds to the needs of residents
Value Weigh Key Baseline Target 2017- Target 2017/18 Quarterly Targets Target Target 2017/18 Means
Propo t Performance 21 2017/18 2018/19 2019/20 Budget per of
sition indicator programme verificat
Q1 Q2 Q3 Q4 Capex Opex ion
Impro 40% % Reputational 66% 70% 70% 70% 70% 70% 70% 70% 70% See
ved management reputation Customer reputation reputation reputation reputation reputation reputation reputation below
Custo index index Satisfaction index index index index index index index for
mer 60% % New 86% 80% 80% 80% 80% 80% 82% 84% details
R50,5m
and Achievement of Achievement Achieveme Achieveme Achieveme Achievem Achieveme Achieveme Achievem
Stake Services Level of SLS nt of SLS nt of SLS nt of SLS ent of SLS nt of SLS nt of SLS ent of SLS
holder Standard (SLS)
Experi
ence
There are two Key Performance Indicators for this perspective which are Customer Satisfaction Survey, Percentage Achievement of
SLA and Sentiment Analysis. These KPI are aligned to the risk that deals with escalation of theft and vandalism
% Reputation management Index has two measures which are weighted at 50% each.
o City Power customer satisfaction survey is measured by City Power and the information is from a survey report.
o The Sentimental analysis is conducted across Traditional media (Print, Online, Broadcast) and Social Media (Weighted
75% & 25%) respectively. The information for the sentimental analysis obtained monthly from data analytics reports and
includes print, online and broadcast.
% Achievement of SLS is the number of measures achieved/Total Number of KPIs in SLS x 100. The KPIs included in the
City Power SLS are:
o Outages resolution rate for traffic lights, public lights, high voltage network and all network. This information is from the
Outage management system
o Query resolution rate for meters, the source for information on the account queries and dispute is spreadsheet.
o Meter reading rate the source of information is a spreadsheet.
o Service connections within 21days for LPUs after payment the source of information is a spreadsheet.
o Baseline development for semi-smart meter vending rate as per plan
Final 19City Power Draft Business Plan 2017-21
5.3. Internal Processes
Joburg Priority:
Create a City that responds to the needs of residents, Promote economic development and attract investment that creates jobs towards achieving 5% economic
growth, Preserve our resources for future generations
Value Wei Key Baselin Target Target 2017/18 Quarterly Targets Target Target 2017/18 Means of
Proposi ght Performanc e 2017-21 2017/18 2018/19 2019/20 Budget per verificati
tion e indicator programme on
Q1 Q2 Q3 Q4 Capex Opex
Optimis 10% Tons CO₂ 6 818,5 96822,8 24205,7 5 454,8 Tons 5 795,7 6 136,7 Tons 6 818,5 24205,7 24205,7 Database
e and offset in Tons Tons CO₂ Tons CO₂ CO₂ offset in Tons CO₂ CO₂ offset in Tons CO₂ Tons CO₂ Tons CO₂
Ensure greenhouse CO₂ offset in offset in greenhouse offset in greenhouse offset in offset in offset in
Complia gas greenhouse greenhouse gas emissions greenhouse gas greenhouse greenhouse greenhouse
nce to emissions gas gas gas emissions gas gas gas
Value emissions emissions emissions emissions emissions emissions
Chains 20% % 99,44% 95% 95% 95% 95% 95% 95% 95% 95% Quality of
compliance compliance compliance compliance to compliance compliance to compliance compliance compliance Supply
to NRS048 to NRS048 to NRS048 NRS048 to NRS048 NRS048 to NRS048 to NRS048 to NRS048 System
R R
10% Number of 6796 3580 units 810 units 100 units 200 units 300 units 210 units 1280 units 745 units 1099,5 2250, SAP, work
units (structures) (structures) (structures) in (structures) (structures) in (structures) (structures) (structures) m m completio
(structures) in in informal in informal informal in informal informal in informal in informal in informal n
informal settlements settlements settlements settlements settlements settlements settlements settlements certificate
settlements with access with access with access to with access with access with access with access with access
with access to electricity to electricity electricity to electricity to electricity to electricity to electricity to electricity
to electricity
10% Number of 270000 2260 public 1000 public 100 public 250 public 300 public 350 public 420 public 420 public
public lights lights lights lights installed lights lights lights lights lights
installed by installed by installed by by City Power installed by installed by installed by installed by installed by
City Power City Power City Power City Power City Power City Power City Power City Power
15% Attainment of Unqualif Clean audit Clean audit Annual target Annual Annual target Annual Clean audit Clean audit R193, Report
a clean audit ied audit Report Report target target Report Report 7m from AG
report report
15% Maintain ISO Unqualif Clean audit Clean audit Annual target Annual Annual target Annual Clean audit Clean audit Report
accreditation ied audit report report target target report report from
report SABS
20% Decrease in New % decrease % decrease Define, Set % decrease % decrease
corruption in in baseline and in corruption in corruption
index corruption corruption targets to index index
index index decrease
corruption
index
Final 20City Power Draft Business Plan 2017-21
There are seven Key Performance Indicators for this perspective which are Tons CO₂ offset in greenhouse gas emissions, %
compliance to NRS048, Number of units (structures) in informal settlements with access to electricity, Attainment of a clean audit
report, Maintain ISO accreditation and Decrease in corruption index. These KPI are aligned to the risks that deal with Unethical
business practices resulting in fraud and corruption activities and Inability of the business model to respond to disruptive forces.
NRS048 is a comparative analysis between QOS System output and National Standard.
Number of units (structures) in informal settlements with access to electricity is Total number of units (structures) in informal
settlements with access to electricity per annum.
Number of public lights installed by City Power is Total Number of public lights installed by City Power per annum.
Attainment of the clean audit as per results of the Auditor General auditing process.
Maintain ISO accreditation as per results of the SABS ISO accreditation process.
Tons CO₂ offset in greenhouse gas emissions from energy programmes
Decrease in corruption index
Final 21City Power Draft Business Plan 2017-21
5.4. High Performance Teams
Joburg Priority:
Create a culture of enhanced service delivery with pride
Value Wei Key Baselin Target Target 2017/18 Quarterly Targets Target Target 2017/18 Means of
Proposi ght Performanc e 2017-21 2017/18 2018/19 2019/20 Budget per verificati
tion e indicator programme on
Q1 Q2 Q3 Q4 Capex Opex
High 10% % of AA 91,24 85% of AA 85% of AA 85% of AA 85% of AA 85% of AA 85% of AA 85% of AA 85% of AA SAP
Perform employees employees employees employees employees employees employees employees employees
ance 10% % of GE 26,73 30% of GE 27% of GE 26% of GE 26% of GE 27% of GE 27% of GE 28% of GE 29% of GE
Team employees employees employees employees employees employees employees employees employees
10% % of PWD 2,35 2% of PWD 2% of PWD 2% of PWD 2% of PWD 2% of PWD 2% of PWD 2% of PWD 2% of PWD
employees employees employees employees employees employees employees employees employees
25% % Job Revised % Job % Job Set baseline % Job % Job
vacancy rate vacancy vacancy and targets vacancy vacancy
rate rate for Job rate rate
vacancy rate
15% % Work place New 90% work 80% work Finalise work 20% work 50% work 80% work 84% work 88% work Compere
skills plan place skills place skills place skills place skills place skills place skills place skills place skills R1168 d to plan
achievement plan plan plan plan plan plan plan plan m
achievemen achieveme achievemen achievemen achievemen achievemen achievemen
t nt t t t t t
15% % Leadership New 90% 80% Finalise 20% 50% 80% 84% 88%
development Leadership Leadership Leadership Leadership Leadership Leadership Leadership Leadership
plan developme developme development developme developme developme developme developme
achievement nt plan nt plan plan nt plan nt plan nt plan nt plan nt plan
achievemen achieveme achievemen achievemen achievemen achievemen achievemen
t nt t t t t t
15% % Employees 56,1% 58% 55% Annual Target Annual Annual Annual 56% 57% Survey
satisfaction Employees Employees Target Target Target Employees Employees report
survey satisfaction satisfaction satisfaction satisfaction
survey survey survey survey
The High Performance Team value proposition talks to productivity, performance, culture and achievement of other goals which is
the sum of knowledge, skills, experience and other relevant work attributes that reside in our workforce. These KPI are aligned to the
risks that deal with Insufficient capability, capacity and commitment to deliver.
Final 22City Power Draft Business Plan 2017-21
There are seven Key Performance Indicators for this perspective which are % of AA employees, % of GE employees, % of PWD
employees, % Job vacancy rate, % Work place skills plan achievement, % Leadership development plan achievement and %
Employees satisfaction survey.
The Employment Equity compliance KPIs are % of AA employees, % of GE employees % of PWD employees.
The Job vacancy rate is about the % vacant positions,
% Work place skills plan achievement and % Leadership development plan achievement are about ensuring staff development
Employees satisfaction survey measures amongst other things the moral and commitment of staff.
Final 236. Day to day operations
This section has five main areas that will assist the company to meet stakeholder expectations:
Communication and Stakeholder management
Revenue Management
Infrastructure Plan and Maintenance
Security of Supply
Anti-fraud and Corruption Plan
6.1. Communication and Stakeholder management
6.1.1. Integrated Communications Strategic Approach
City Power is embarking on a journey to change the way in which the organisation
communicates and integrates its communications efforts to achieve optimum results. Whilst City
Power has made great strides in positioning its leadership, in order to effectively communicate
on projects and other initiatives, there needs to be one voice to integrate marketing
communications efforts. There needs to be a focused approach in communicating City Power
and the broader City of Joburg’s overall vision and mandate, business, strategic and political
aspirations for communication to yield the desired results.
City Power has developed an Integrated Marketing Communications Strategy that integrates
public relations, marketing and advertising, internal communications, stakeholder engagements
and corporate social investment efforts.City Power Draft Business Plan 2017-21 Internal Communications Approach In order to drive a high-performance culture, engagement of internal employees must be prioritised for City Power to achieve its strategic business objectives. Final 25
City Power Draft Business Plan 2017-21
External Communications Approach
External relations will focus on the following:
Proactive media engagement
o The media engagement programme is aimed at building relationships with key media
influencers to position City Power, its vision and positioning and ensure an
understanding of these in the media to ensure their effective reporting on it.
Brand championship
o Use champions e.g. happy customers, third party endorsements to spread the good
word about City Power and its initiatives
Story telling
o Leverage different initiatives for story telling opportunities such as sharing good news
stories
o Tell success stories of City Power’s achievements as a long term strategy Stories will
be packaged in various forms audio and video.
Social Media
o Use social media platforms relevant to the business including Twitter, Facebook and
Instagram as a platform to engage with customers and other stakeholders
Speaking engagements
o Identify relevant industry conferences or workshops where spokespeople can give
presentations as keynote speakers / speakers at events in order to establish City
Power and City of Joburg’s leadership and spokespeople with key stakeholders; and
show visibility and involvement of City Power at relevant industry events (key for
stakeholder engagement)
Targeted leadership profiling
o Identify relevant media profiling opportunities for identified spokespeople
Thought leader positioning
o Make industry contributions on relevant topics, develop content that speaks to industry
changes, innovations, topical issues, and research and byline articles for targeted
media distribution
Corporate Social Investment (CSI) Approach
Corporate social investments will be focused on enabling the business to succeed while
empowering communities, because the success of society and our communities is linked
with the future success and performance of the business.
The approach will be focused on yielding long-term positive results for clients and building
sustainable relationship with the communities in which they operate.
Key considerations will be made in aligning solutions with the organisation’s business
objectives, values and vision of becoming a world class electricity distributor.
Employee’s participation will form a key part of the CSI programme and will be used to
boost morale internally by involving them to participate in identifying worthy causes in
communities.
Final 26City Power Draft Business Plan 2017-21
CSI Considerations
6.1.2. Stakeholder Management Approach
Stakeholder management for City Power is aimed at:
Creating awareness of City Power activities, services, projects and programmes
Forging and strengthening positive relations with all internal and external stakeholders
Encouraging public participation and engaged active citizenry
Ensuring effective communication to all stakeholders by providing relevant and credible
information
Promoting and enhancing the City Power brand
Key Stakeholders
• Keep informed • Keep informed,
monitor, and
manage very
closely
Internal Media
Political Customers
• Keep informed
• Keep satisfied
and monitor
Final 27City Power Draft Business Plan 2017-21
Engagement with Political Stakeholders:
Engage with councillors to determine the method of communication and interaction with
customers in their area.
Enable and empower councillors to engage with communities on the challenges, benefits,
workings and implementation plans of City Power
Equip the City Power technical teams to successfully interact with residents aided by the
area councillor’s support.
Enable smart communication (two way) between City Power, the councillors and their
constituents.
Approach
Engagement Strategy
City Power will engage with the councillors in all regions as well as the dedicated councillors for
City Power projects.
Final 28City Power Draft Business Plan 2017-21
6.2. Revenue Management
As part of City Power business of buying and selling electricity, the calculation of losses is always
based on the difference between the electricity that is bought and electricity that can be accounted
for (e.g. Electricity Sales, Streetlights, and free basic electricity). During analysis the losses are
then separated between technical and non-technical.
6.2.1. Technical losses
Technical losses describe energy losses in the network encountered through the transmission
cables and transformer, due to network design and materials of construction. In essence,
technical losses result from differences in voltages and longer feeder lines from substation or
transformer, to the consumption end-point at the customer’s premises.
6.2.2. Non-technical Losses
Non-Technical losses define lost or uncollected revenues relating to the incomplete and
inaccurate customer billing and poor management of metering operations in the distribution
network. As a result, non-technical losses may be considered to be revenue losses due to the
theft of electricity and inability to measure customer energy consumption accurately for billing.
The following are common factors that contribute to non-technical losses:
Illegal Connections: Energy theft such as in non-proclaimed/ informal settlement, own-
connections before the meter or tampering with the meter to bypass readings dials. Illegal
connections are compounded by the inherited challenge from Eskom of poor customer
addresses and meter locations managed. This challenge also created a scenario where
“ghost” prepaid vending became possible.
Bypassed Meters: Emergency calls out after hours, often result in power restorations
where a customer’s meter is bypassed and the necessary meter change-out does not
happen. This is caused by lack of job card data which electricians do not close, in order
to enable metering operation to replace the bypassed meter.
Meter Tampering: Meter tampering is often a problem with prepaid customers that do not
have split meters. Customers on AMR meters are also known to tamper with the
communications modules by stealing sim cards, or removing fuses on meters. The result
is an online meter that can be detected, but does not transmit customers’ consumption
data, due to communication failure.
Poor management of meter installations and maintenance: Meter installations and
trouble-shooting conducted by poorly skilled technicians often results in situations where
a meter detected as online, but the necessary configurations, especially for AMR and
Prepaid are not which leads to failure in communication to transmit meter data, or failure
in vending.
Poor maintenance of customer data (Addresses, account Number, etc.): Lack of
customer data quality management and associated system updates leads to various
challenges as follows:
o Un-located addresses for manual read meters: Inability to respond swiftly to
detected energy theft, and inability to fast-track maintenance of meter change out
for customers who logged queries
Final 29City Power Draft Business Plan 2017-21
o Poor data capturing of meter readings: Meter readers often capture data that
throws exception during the validation phase. Some of these errors are not resolve
within the meter reading window and therefore impact on accurate billing of
customers. Meter readers must face penalties for poor data capturing.
o Inaccurate and incomplete billing of customers: Inaccurate and incomplete
billing tends to promote the culture of non-payment with disgruntled customers.
Inefficient management of meters or not fulfilling work orders often leads to
customers been billed on estimates rather than actual consumption. There are
cases where customers on prepaid are still billed and invoiced for some time after
they have been converted to prepay. Inaccurate billing is a major contributor for
customers having negative sentiments about the organisation.
Corruption and fraud on the side of utility or distributor’s employees: A number of City
Power employees and electricians have been in the past found to be guilty of illegally
connecting customers, where employees have wilfully swopped registered meters for
unregistered ones. Proper processes and controls must be introduced that dictate meter
handling and issues at stores.
In 2012 City Power did a business case for reducing losses and improving revenue. Below is
the summary of proposed solutions which include smart metes.
Final 30City Power Draft Business Plan 2017-21
6.2.3. In light of budget Lekgotla: Implementation plan
Metering - proposed expenditure plan eliminating non-technical losses
Programmes Budget
Prepaid R 39mil
Smart meters R 55mil
System Enhancement R 25mil
Winter Strategy R 14,8mil
Total R134,8mil
Targets per area
Suburb/ Total Monthly Start Date End Date Budget Recover
Township Customers Target y costs
per Suburb/ /annum
Township
Kew 577 577 1st July 2017 31 July 2017 2.6M 1.3M
Lawley 10536 3000 1st August 2017 30 November 2017 29M 12M
Lenasia 13064 3000 1st August 2017 15th December 32M 24M
2017
Rabie Ridge 3539 1769 1st September 2017 30 October 2017 7.2M 7.7M
Tshepisong 12276 2500 1st August 2017 15 December 2017 23M 5.6M
Klipfontein 2196 1000 1st September 2017 30 October 2017 6.5M 6.7M
Total 42188 11846
Breakdown Analysis
TOTAL SURBURB/TOWNSHIPS BREAKDOWN ANALYSIS
Total
Suburb/ Customers Per Total Not Total Revenue Total Average
Total vending Different
Township Suburb/ Vending Per Yr Per Yr
Township
KEW 577 452 125 327 4 759 225.60 10529.26
LAWLEY 10536 2814 7722 -4908 4 334 981.30 1540.51
LENASIA 13064 9425 3639 5786 61 657 211.70 6541.88
RABIE RIDGE 3539 959 2580 -1621 2 887 758.40 3011.22
TSHEPISONG 12276 10268 2008 8260 28 652 133.40 2790.43
KLIPFONTEIN 2196 868 1328 -460 4 381 695.00 5048.04
Total 42188
Final 31City Power Draft Business Plan 2017-21
6.3. Service Delivery Maintenance Plan
6.3.1. Background
City Power owns and operates an extensive transmission and distribution network as well as
public lighting infrastructure. The Engineering Operations Group is tasked with undertaking
planned and unplanned maintenance with the aim to achieve maximum continuity of supply.
The Group is mandated to operate and maintain the electricity network in a manner that is safe,
reliable and cost-effective to maximize continuity of electrical supply.
There are 10 depots distributed across the City Power footprint. Each depot takes full
accountability for service delivery within the designated geographical area.
Below is the overview of various network components within the entire City Power footprint;
10
Depots
268 18,577 270,000 17,500km 823km
Substations Load Streetlights Underground Overhead
Centres Cables Lines
6.3.2. Critical challenges
City Power’s infrastructure continues to age, it is critical to take active steps to counter network
failures. As a result, the Group has identified the following challenges that affect the optimal
functioning of the network;
Age of existing infrastructure presents challenges in terms of sourcing of spare parts,
maintenance, operation and Original Equipment Manufacturers (“OEMs”) support.
Cable theft, illegal connections and vandalism of infrastructure, particularly underground
cables.
Illegal connections causing unsafe working conditions, premature equipment failure and
potential fatalities.
a) Frequent equipment failure due to overloading
The electrification networks to service townships were designed for 1x RDP house per stand.
The electrical infrastructure was well within the design limits until the advent of backyard
dwellers.
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